Read the document titled "Enron excerpt" beginning on page $39.$ Then, read "Enron et al$.-$ a

comment" by Joel Demski $(2002).$

Required:

Briefly summarize the readings.

What is mark$-$to$-$market accounting?

a$.$ Hint: Use an example to demonstrate the type of accounting Enron was engaging in$.$

The following sequence of cash flows will be helpful. Assume a $10\%$ discount rate.

First, calculate the accounting income for each year $($i$.$e$.,$ use historical cost

accounting$).$ Second, calculate the income using Enron's method $($i$.$e$.,$ fair value

accounting$).$

How does mark$-$to$-$market accounting relate to the accountant's objective of faithful

representation?